- Digital technologies can drive inclusive and sustainable growth in low and middle-income countries.
- Governments must develop policies to maximize the benefits from digitalization.
- If not managed well, the digital revolution could exacerbate inequalities.
The Fourth Industrial Revolution (4IR) is expanding at an exponential rate. Global internet traffic has grown from 100 gigabytes a day in 1992 to more than 45,000 a second in 2017 – transforming industries, economies and societies.
Technologies are driving development: satellite data, artificial intelligence and cloud computing are being used to detect illegal mining, tackle deforestation and manage freshwater resources; drones and machine learning are increasing crop yields; e-learning is making education cheaper and more accessible; and smart grids and solar panels are bringing electricity to underserved rural areas.
If managed well, digitalization can open up new pathways for regional integration, economic development and prosperity. However, gains from 4IR are unevenly distributed, both between and within countries. ODI research shows that, while expanding internet penetration has boosted productivity by 11% in middle-income countries, the impact in low-income countries is just 3%.
Low and middle-income countries (LMICs) urgently need to unlock the new possibilities of digital technologies to drive inclusive and sustainable growth to achieve the Sustainable Development Goals (SDGs) and ensure that no one is left behind. Unleashing the full potential of technologies means scaling them faster, globally and in an appropriate way in order to deliver on the 2030 Agenda in time, and ensure that the benefits of 4IR are distributed inclusively and sustainably. Here are four ways governments can help do this.
1. Expand access for the bottom billion
Lack of access to digital infrastructure is a key challenge in LMICs: both hard infrastructure, such as telecoms networks, sensors and ICT equipment; and software, human capabilities and appropriate regulation, including taxation and fiscal policy. Strengthening basic digital infrastructure will mean lowering the cost of capital and internet in developing countries, developing public-access solutions and sharing digital infrastructure. In terms of data infrastructure, there is a need for governments to build capabilities and frameworks around the classification of data and lay down data standards. Companies need to lead on the collection and processing of data.
Connectivity must improve. ITU data suggests that only 25% of people in sub-Saharan Africa have access to the internet, compared to the global average of 50%. Within Africa there is significant disparity in internet access and use; penetration lags behind in landlocked countries, in rural compared to urban areas, and between men and women, who tend to have less access to digital technologies and skills. Poor infrastructure – unreliable power supply, low postal competency, inadequate roads and ports – also constrains the use of digital technologies.
2. Innovate for sustainability and job creation
While there are growing concerns that automation will displace jobs in some sectors, digitalization will also create new employment opportunities by lowering the costs of trade, reducing barriers to market entry, expanding market access and boosting productivity. In Tanzania, for example, the Flying Labs hub is creating new jobs in robotics technology and data product.
Generating these new jobs will require investment in digital and soft skills through education and training, and policies for fostering competitive and innovative economies. Digital solutions can help, at least to some extent; EdTech, for instance, can increase productivity at the point of delivery, improving connectivity. But the Digital Manifesto, developed by the Pathways Commission, reminds us that technology is not a silver bullet: governments need to be wise with their choices to ensure that health, education and other services are effective, efficient and equitable.
3. Finance and scale tech for good
Unclear direction, short-term goals and lack of government support for investment are key challenges in leveraging the full potential of technologies for the SDGs. There is a lack of a common purpose and language – including an agreed definition of “tech for good”. These challenges are compounded by lack of capital and insufficient early-stage investment. Financing models are not set up to incentivise investment for long-term gains. Effectively scaling up these technologies will require efforts across multiple stakeholders. The Coalition for Digital Intelligence, for example, is a multi-stakeholder community that will coordinate the implementation of a digital intelligence framework across both the technology and education sectors, making sure that both work together.
4. Update regulatory frameworks for the platform age
LMICs are facing even greater regulatory challenges with the rising power of e-commerce platforms such as Amazon and Alibaba. The emergence of these digital giants is making it increasingly important for countries to build capacity to develop appropriate competition and fiscal policies. Australia, for instance, has passed new tax legislation on low-value imported goods and digital goods and services (e.g. music bought online or digital streaming services).
4IR is also changing the nature of work. While digital platforms such as Upwork are reducing the cost of exchange within the informal economy, the demand for digital labour comes mainly from wealthy economies, with workers across the globe competing for employment.
This distributed supply and concentrated demand implies significantly increased competition and rising precarity of work, with online work often being re-outsourced to LMICs under worse conditions. A recent survey by the International Labour Organisation found that crowd-workers in North America, Europe and Central Asia earn more than workers in Africa and the Asia-Pacific: in North America $4.70 per hour and in Europe and Central Asia $3.00 per hour, compared to $1.33 in Africa and $2.22 in Asia and the Pacific. Labour regulations therefore need to be reshaped to protect and bolster the livelihoods of both the physical and the digital workforce.
There is an urgent need for governments in LMICs to weigh up the opportunities and challenges presented by the digital economy and develop appropriate policies to maximise the benefits from digitalization, complementing both national and regional priorities for achieving the SDGs. The opportunities presented by the digital revolution are enormous but, if not managed properly, they could be outweighed by the risk that they will exacerbate existing inequalities and/or create new ones, slowing progress towards the SDGs.